The abbreviation of GDP stands for gross domestic product, which today is the main indicator of economic development. This coefficient is determined from the market price of all created goods and services on the territory of the state for a period of time, which, as a rule, is equal to a year. With the growth of the indicator, taking into account inflation, we can talk about economic growth, an increase in the volume of services and production. Therefore, almost all world countries seek to increase GDP.
In addition to the general, economists operate on another important indicator - GDP per capita of the countries of the world, which is calculated by dividing the total cost of goods produced (GDP) by the population of a country. This indicator is primarily used to adequately compare the economic development of different states, taking into account the number of people. For example, Russia has per capita GDP in 2011 at $ 16,687. The country ranks 46th in the World Bank World Ranking.
GDP per capita is calculated in dollars, while the purchasing power parity of the state’s currency is taken into account, in other words, it takes into account not the national currency rate, but the number of services and goods that can be bought.
Another important indicator is associated with GDP per capita - labor productivity. However, in this case, the calculation method is slightly different: they divide the cost of all goods only by the number of working citizens, and not by the entire population.
Some economists are critical of calculating per capita GDP; they talk about the unreality of this indicator. Disputes are caused by the legitimacy of including in the calculation base the cost of services and goods that were produced on the territory of the state by companies having head offices abroad.
To avoid disagreements, another indicator of the country's economic development, the gross national product, is being calculated in parallel. This ratio takes into account only those services and goods that are produced by organizations belonging to national capital.
GDP is divided into potential, actual, real or nominal. The last indicator is expressed in the prices of the current year, the real one is calculated at the prices of the last year, taking into account the adjustment for inflation.
The actual value of GDP is determined in case of underemployment of the country's people, and the potential value - in case of full employment of the entire population. The difference in the indices is to reflect the real possibilities of the country's economy or the overestimated - potential ones.
Three methods are used to determine per capita GDP: distributional production and final use. In the first case, the amount of factor income is taken into account (profit of organizations, interest, rent and wages). This method includes the income of all business entities residing in the territory of the state that are residents and non-residents.
When finding GDP using the production method, value added is used. By means of the indicator obtained, a monetary value of all the services and goods produced in the country is carried out for the year. Only the value added is taken as the calculation base — the difference between the firm’s income and the intermediate costs (the cost of producing services or goods). At the same time, goods that are part of the final product cannot be double counted.
End-use methodology takes into account costs. In this case, GDP determines the consumer spending of the population, net exports, government spending on services and goods, as well as investment in production.